Tuesday, August 9, 2016

Does TPP matter? Does Singapore matter?

During
his recent trip to the US, Singapore Prime Minister Lee Hsien Loong, along with
US President Barack Obama, made a joint pitch for the ratification of Trans-Pacific
Partnership (TPP) trade agreement. However, the hope that the TTP would form
the foundation of a robust and prosperous East Asian security regime centered
on economic integration and positive US engagement is fading as China has
chosen to react to The Hague ruling by unilaterally redefining its role in East
Asia in opposition to the security and economic regime the US is seeking to
reinforce.

To paraphrase Sherlock Holmes, the most interesting question at the joint press conference
conducted by Singapore Prime Minister Lee Hsien Loong and Barack Obama in
Washington on August 2 was The Question That Wasn’t Asked.

The presser was noteworthy for President Obama’s full-spectrum
denunciation of Donald Trump as “unfit”, and a lot of eye-glazing gabble about
the TPP, which we’ll get to later.

But not a single remark from the headmen — and not a single question from
the apparently obedient press corps — about the hot-button issue du jour,
the UNCLOS arbitration commission’s sweeping repudiation of the PRC’s (China’s)
nine-dash-line claims in the South China Sea…and the PRC’s categorical
repudiation of the repudiation.

As I discussed
previously, the ruling leaves no “offramps”, in other words no room
for engagement with the PRC on the issues under dispute, and every indication
to date is that the PRC has decided not to capitulate. Instead, it will
treat the South China Sea not just as a frozen conflict, but one that it can
and must be ready to heat up and bring to a boil as necessary in order to
protect and assert its regional power status.

Faced with this unpromising state of affairs, it would appear that
President Obama has made the decision not to roil the remainder of his
presidency — which will feature a farewell appearance at the G20 summit in
September in Hangzhou hosted by the PRC — by leading a global coalition of the
indignant to demand the PRC respect the ruling.

In other words, it will be up to anticipated successor Hillary Clinton
to start as well as finish any high-profile ruckus over the South China Sea.

The PRC is also exploiting President Obama’s lame duck status and
aversion to rocking the boat by ratcheting up the rhetoric in Asia. As
part of its “not yielding an inch” posture, it engaged in bellicose
fulminations against Australia and South Korea, sent its massive fishing fleet
into the South China Sea, and is going to conduct a joint Russo-Sino naval
exercise down there.

One intention, I think, is to limit Hillary Clinton’s escalation options
when she gets to the White House to the prospect of an imminent direct clash
between the PRC and the US.

The PRC has prepped its doctrine, diplomacy, and public posture to make
it clear it is ready to play chicken with the United States and is not going to
back down if an actual confrontation occurs.

Since the Pentagon’s comforting assumption has always been that the PRC
is a paper dragon that will reliably fold up into a worm at the first whiff of
gunpowder, this might make for some interesting times in the first years of the
Clinton presidency.

But more importantly, I think, is the signaling that the PRC has decided
not to fear the dynamic of “security polarization” which lies at the heart of
the pivot strategy, a virtuous (to the US) cycle by which the PRC response to
the US containment strategy spooks the herd, causing anxious smaller nations in
the region to strengthen their military ties to the United States.

PRC message: we can’t fear the pivot; we won’t be cowed by the ruling;
and we can live with a heightened level of security antagonism with the United
States and our neighbors.

Putting it another way, military friction is a cost of doing business
and when it comes to its Asian bailiwick, the PRC is all business.

And it’s not just a question of military posturing.

The PRC’s ban on Korean K-pop bands in the wake of the THAAD decision
elicited the usual Western sniggering. But it’s a signal that the PRC is
willing to bear — and inflict — the economic costs of polarization as well.

That’s an awkward issue for the United States and a major headache for
Lee Hsien Loong and Singapore, one that he was loath to discuss at the press
conference.

If the US imposes an expensively polarizing security/containment regime
on Asia without a compensating economic strategy, the pivot is built on a
foundation of sand.

A purely military containment strategy worked against the USSR since the
Soviet Union and its satellites formed an inward-looking economic autarchy, and
Western Europe inevitably looked to the US and its massive economy as its only
option for economic integration.

Not so in Asia. The PRC under Deng Xiaoping made the decision to
eschew the autarchy model and embed China in the world and regional economy.

To bid for the loyalty of ASEAN, the United States has to come up with
something that matches or approaches the PRC as an engine of economic growth.

The US can’t do it alone. Over the next decades, its share of the
world economy is expected to dwindle to about 25% from a post-World War II high
of 50%. That means somebody else has to pick up the slack.

The great US hope, of course, is Japan, and Prime Minister Abe is doing
his best to roll back PRC gains in Asia and resurrect the World War II model of
Japanese economic penetration in places like Taiwan, the Philippines, Vietnam,
Indonesia, Thailand and Burma.

The patience that the US and the western financial world have displayed
with Japanese fiscal policy, its gigantic debt mountain, and the farce of
Abenomics is, I think, a sign of a desire to give Japan every conceivable
chance to claim economic leadership of maritime Asia.

If the Japanese effort falls short, which is quite possible given its
fiscal woes and aging population, there’s India. And, if Singapore has
its way, TPP.

Which brings us back to the Lee/Obama press conference…and TPP.

Singapore occupies a special place in the hearts of American
strategists. It’s a technocratically run state of bureaucrats,
commissions, and think tanks filled with people in suits who talk the language
of Beltway bafflegab.

President Obama characterized Singapore as often “the only grown-up in
the room,” a statement that perhaps did not particularly enchant the putatively
immature leaders of Indonesia, Malaysia, Thailand, the Philippines, the PRC et.
al. but probably accurately reflected the US relief that at least somebody in
Asia is ready to engage with the United States on the terms that it’s
comfortable with.

Singapore relishes this role, and also its role and leverage as the
perceived honest broker between the PRC and the United States. And it
also serves as the keeper of the flame of TPP, a regional trade bloc originally
conceptualized by Singapore, and a symbol for Singapore and ASEAN of the
importance of East Asian economic integration as the focus of US engagement
with the region.

The message that Prime Minister Lee and Singapore have consistently
advanced during the “pivot” years is that the pivot can’t just be
military. It has to deliver advantages that compensate for any drag on
regional growth resulting from ASEAN-China estrangement.

Singapore characterizes TPP as the key signal that the “pivot” is more
than a cynical ploy to find a new, ego-boosting mission for the Pentagon and a
distracting overseas adversary for the US civilian leadership, fatten the
bottom line of defense contractors, and burden the region with the inflated
arms expenditures and corruption of domestic politics and governance that go
hand in hand with front-line membership in a US military alliance.

As Lee presented it, therefore, TPP is central to the credibility of the
pivot. If the US doesn’t ratify TPP, it’s a sign it doesn’t care about
Asia — or Singapore; it only cares about Lockheed and the E-Ring.

I believe Lee’s full-court press on behalf of TPP during his recent trip
to Washington was an attempt to assert the shaky “centrality” of ASEAN, the
importance of economic arguments, and the relevance of Singapore.

Fact is, TPP is not going to happen during Obama’s term; the
expectation is that as soon as the populist follies of the US presidential
election are in the rear-view mirror, President Clinton and her business allies
will make sure that the TPP gets done. Whether TPP does much more than
deliver a zero-sum payday to global corporations remains to be seen.

In addition to delivering his plea to a largely indifferent lame-duck
audience, Lee oversold his case somewhat by raising the dire prospect that
Japan might become a declared nuclear power (thereby cratering the US security
architecture in Asia) if TPP fell through (at the 48:00 mark) :

“Mr. Abe…decided to commit [to TPP]…[not ratifying TPP] hurts your
relationship with Japan, your security agreement with Japan, and the Japanese
living in an uncertain world under the American nuclear umbrella will have to
say on trade the Americans could not follow through, if it’s life and death
whom do I have to depend upon? It is an absolutely serious calculation
which will not be said openly but I have no doubt it will be thought.”

With all due respect to Prime Minister Lee, I suspect that whenever
Japan decides to waive its magic wand over its plutonium, nuclear science, and
rocketry assets and convert them into an announced nuclear weapons capability,
any TPP-related disappointment will be a secondary factor.

Milsec considerations are becoming paramount in the calculations of the
powers that matter and the economics-centric Singapore model for Asia—and
Singapore’s role—is under threat.

The hope that the TTP would form the foundation of a robust and
prosperous East Asian security regime centered on economic integration and
positive US engagement is fading now that it’s clear that the PRC has chosen to
react to The Hague ruling by unilaterally redefining its role in East Asia in
opposition to the security and economic regime the US is seeking to reinforce.

Now, with hawks in the saddle, militarization galloping along, and
economic retaliation in the offing, the real questions are Does TPP
matter? Does Singapore (and its self-assumed role of balancer between the
US and China) matter?

When those questions get asked, Singapore might not like the answer.

Peter Lee runs the China Matters blog. He writes on the intersection of US
policy with Asian and world affairs.